In our previous coverage of day 2 of the PICNIC conference, I skipped over Peter Molyneux’s session called Innovation in Entertainment because it warranted additional attention. In case you’re unfamiliar with his work, Molyneux is a computer/video games mogul who has been working in the games industry for over 20 years now. His work pioneered several genres of video games through projects like Populous, Theme Park and Syndicate for Bullfrog Production, now integrated into EA UK.

Molyneux later moved on to Lionhead Studios, where he created ground-breaking games including Black & White and Fable. Molyneux is currently the head of Lionhead Studios, which was acquired by Microsoft Game Studios in 2006. Since June 2009, Molyneux has also been head of the European division of MS Game Studios.

Molyneux started his speech by showing his passion for games and the games industry. He declared that games are one of the most creative endeavours in existence because they take technology and use it to present a story in the most engaging and immersive way imaginable. For Populous, this involved using a 5×4 pixel grid for a characters face, making it rather hard to show emotions. Molyneux noted that the distance between the screen and the player is still huge: current resolutions are still far from reality. Moreover, games today mostly seem to be for one of only two categories: either for corporate use, or for the hardcore gamer. Games require a lot of manual dexterity, use complicated controllers and create other barriers that prevent players from having an enjoyable experience.

This is where Project NATAL comes in. You have probably heard of NATAL, the new technology allowing you to use your body as a controller, from Microsoft’s showcase of at the 2009 E3. NATAL is not just a motion detection technology, however. It also offers the possibility of facial and voice recognition. Molyneux and Lionhead have been working on taking these technologies and combining them with advanced versions of the AI and adaptive learning systems used in games like Black & White to create a whole new entertainment experience called Milo. Milo is a little boy that lives in your Xbox who interacts with the user in several very interesting ways. The best way to get an idea of what Milo can do is to watch Molyneux discuss the project.

I was truly blown away by what technology paired with creativity is capable of achieving. It was stunning to see Milo work. Unfortunately, the demonstration was not conducted live on stage, but through an extended version of the demonstration given in the Youtube video linked to above. I’m very curious to see if Lionhead and Microsoft will manage to make this into an even greater experience. Molyneux’ greatest challenge has often been to turn a brilliant, visionary concept into a fun and entertaining game. He’s been quite successful with it in many cases, while other attempts failed to fully realize thier full potential.

Afterwards, the folks at Fais Moi Jouer offered to let me tag along for a lightning-fast 2 minute interview with Molyneux. FMJ’s Julien Aubert asked Molyneux to comment on ARGs and how they could be used to extend the experience of NATAL/Milo beyond the console. After explaining the concept to Molyneux, he expressed skepticism about the idea, noting that ARGs can be good as long as they are not just there as an excuse not to have an entertaining experience with the actual game. You can view his response here.

During his presentation, besides being very impressed, one other thought crept into my mind, which I even tweeted about during the conference: “isn’t Milo ‘just’ a surrogate for making actual friends, and isn’t that a bad thing?” While I had the opportunity, I thought I’d ask Molyneux himself. Julien was kind enough to record his response. While I’m not sure the Theme Park analogy covers quite the same ground, I agree with the ambition: focus will be on augmenting interaction rather than replacing it. So keep an eye out for Milo‘s release.